If you own a business in the US, you may have employees or contractors. Your responsibilities to each group of individuals will differ, especially regarding taxes and specific forms. One of the necessary tax forms for your independent contractors is the IRS W-9 form.
Employers use it to collect a contractor’s tax ID details and certification. Whether you handle taxes yourself or hire an expert, you still need to understand how the W-9 form works.
This article explains what a W-9 is and who can file it. You will also discover when to request the form, how to fill it out and see what it looks like.
What is W-9 Form used for?
The W-9 form is used for collecting a vendor or contractor's accurate personal and tax information. When companies hire contractors and pay them over $600 annually, they file taxes. Employers need the correct information so digital nomads and the company and contractor can correctly issue and file tax forms.
Thus, they issue contractors the W-9 form. The contractor fills out the form and sends it back to the client. This is perhaps the most secure and government-approved way to give out sensitive information to a client. Employers and contractors don’t have to send this form to the IRS.
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Who Can File Form W-9?
A W-9 form is for non-employees only contracted by a business or individual. These are freelancers or independent contractors paid above $600 annually by clients. Contractors can get certain tax deductions after filing this form. However, not all contractors can file Form W-9.
The W-9 independent contractor must be a US citizen or national to file this form. They must also have a W-9 Tax Identification Number (TIN) and Social Security number (SSN). If an employer or company hands an individual a W-9 form, they are contractors.
When to request a W-9 form
There’s no statutory period to request a W-9 form from a vendor. However, experts like Skuad — offering international hiring solutions to clients in over 160 countries — recommend requesting a signed W-9 form before you begin a partnership with a vendor. Requesting the form early gives you enough time to make corrections or adjustments before you file taxes.
What does W-9 Form look like?
The W-9 document looks similar to other IRS tax forms. You can download it from the IRS’s website. It displays W-9 as the document’s title for easy identification. It is self-explanatory, and its sections have descriptions to guide the taxpayer as they fill it out. Here’s what a W-9 looks like:
Information required on Form W-9
When you issue a W-9 form to a contractor or vendor, they will fill it out with the following information:
- Their name as it appears on their tax returns
- Other names or business names (optional)
- Business classification
- Backup withholding exemption eligibility
- Business address, including city and zip code
- Account numbers
- W-9 Tax ID Number details (Social Security Number or Employer Identification Number)
- Certification (where they will sign)
How to Fill Out Form W-9
Filling out the W-9 form is straightforward if you have the correct documents. Taxpayers must fill out the W-9 form correctly:
- Ensure the issuer (client or employer) fills in their name and Employer Identification Number on the form.
- Indicate your full name as it shows on your tax returns.
- Add any other name you use for your business.
- Check the box that correctly classifies your business (sole proprietor, partnership, S corporation, etc.).
- Fill out the exemptions section if it applies to you.
- Fill in your address.
- Enter your account details for transaction purposes.
- Enter your W-9 TIN and SSN as an individual vendor or sole proprietor. Alternatively, enter the Employer Identification Number if you run an LLC.
- Certify that the information is correct by signing and including the date.
Penalties for non-compliant W-9 Form
Failure to comply with the requirements of the IRS W-9 form may result in penalties. Falsifying information on the tax form may lead to fines or imprisonment. Taxpayers who willfully commit perjury may get between $50 and $500 fines each time they don’t comply.
Compliance can be tricky for employers doing international taxes for a remote team. Disclosing or using the vendor’s information for other purposes will lead to prosecution. They may get heavy fines or a prison sentence.
How Skuad can help you with W-9 Form
The W-9 form is vital. You need it to secure your contractor or vendor’s account and business information in case of an IRS audit. Navigating the tax processes for contractors can be tricky without the help of hiring experts like Skuad.
At Skuad, we give you access to our unified platform, which allows you onboard, pay, and file taxes for your workers. Our tax experts will help you and your vendors identify the correct tax forms and assist you in filing them. Contact Skuad experts today!
Frequently Asked Questions about the W-9 Form
Is there a Form W-9 for 2023?
A W-9 form for 2023 is available on the IRS's official website. Although the W-9 document the IRS issues bears "Rev. October 2018," it is valid for 2023.
Where can I download a free W-9 form?
There are various websites to download the W-9 form. However, the IRS’s official website remains the authorized source. You will also find instructions for completing the W-9 form on the website. If you want to learn the adjustments to the form, you will also find them on the website.
Who needs to fill out a W-9?
A vendor or contractor earning over $600 from a client or employer must complete a W-9 form. The individual or entity must be a US national.
What is the current W-9 form?
The current W-9 form displays the contact, account, and business information of a vendor working for you.
Is a W-9 required every year?
No. A W-9 form is not required yearly as it has no expiration date. It remains valid as long as the information on it is accurate. You may only request a new one if the vendor changes or updates any information.